Management by objectives (MBO) is a participative process involving all management levels. This process measures and evaluates both segment and individual performance. MBO is a strategy of planning and obtaining results in the direction that management wishes to take while meeting the goals and needs of its participants. Upper and lower levels of management jointly identify the organization’s goals. The relative areas of responsibility are defined and expressed in measurable terms. These terms are used to assess the performance of each manager.

The exact procedures employed in implementing MBO vary from organization to organization and from unit to unit; however, the basic elements of objective setting, participation of subordinates in objective setting, and feedback and evaluation are usually parts of any MBO program. The emphasis, for both the superior and the subordinate, is on participation, communication, and feedback.

Required:

a. Describe briefly the steps you think should be involved to have successful employee participation in setting goals.

b. Explain to what degree the process suffers if some of these steps are omitted.

Discuss what problems you can identify with a participative approach such as MBO.

d. Assume you are the chief cost accountant, what should be your role in a participative approach:

(1) Within your own cost accounting department?

(2) Within the entire organization?

e. Describe how the degree of goal congruence already achieved within an organization affects the successful implementation of a participative process.

f. Discuss why a participative system could stimulate interest in the products of the cost accounting system over a wider range of users.